TeraFX

terafx.com briefly

TeraFX UK is a trading name of Tera Europe Limited, which is authorized and regulated by the Financial Conduct Authority (FCA). TeraFX UK provides online trading in currency pairs, and CFDs on indices, commodities, and precious metals through the world’s most popular trading terminal – MetaTrader 4 (MT4). The company claims it is a Straight Through Processing broker, which uses the transparent No Dealing Desk (NDD) execution model. You can start trading with as low as USD100.

Regulation

It is crucial to know where and by whom the company is regulated. TeraFX is authorized and regulated in the UK by the Financial Conduct Authority (FCA) under reference number 564741. As a regulated company, it must maintain certain rules and obligations, offering its clients the highest security. TeraFX is obliged to segregate all its retail clients’ funds from its own funds. In addition, retail clients are protected by the Financial Services Compensation Scheme (FSCS) and if the company is unable to pay claims, customers can apply to this scheme for compensation.

Account Types

There are three types of live accounts, which differ mainly in the spread and the number of instruments offered.

Starter account – There are 82 trading instruments available and the average spread for the EUR/USD pair is 2 pips. Trading is commission free.

Premium account – There are 147 instruments available for trading and the average spread for the EUR/USD pair is 0.6 pips. Trading is commission free.

ECN account – There are 82 trading instruments available. The spreads do not have markups – they are derived directly from the liquidity providers. However, there is a USD7 commission per lot traded.

If you are an experienced trader, you can apply for a Pro account where the conditions will be specified individually.

The minimum deposit amount is USD100. The company does not clarify whether this applies to all types of accounts.

Market Maker or STP brokerage?

The Execution Policy file shows that TeraFX is a Matched Principal Brokerage company, which uses a Straight Through Processing (STP) model to execute orders. According to the regulated activities, the company cannot hold financial instruments for its own account unless it meets the matched principal exemption conditions. In other words, TeraFX is a pure STP brokerage company and it is required to transmit/match each client’s order with counterparties from liquidity providers. In this way, the company does not keep the financial risk to itself, but transfers it to the liquidity providers; therefore, there is no conflict of interest, such as with market makers.

The same file reveals that when executing market orders, there may be a difference between the price selected on the trading system and the final execution price received. This difference is known as slippage and depends mainly on the market liquidity.

It is also written that a stop order may be triggered by the market trading through or gapping over a specified price. If market conditions trigger a stop order it becomes a market order, which also is subject to slippage. This means that your final execution price may be less favorable depending on market conditions. Stop orders guarantee execution but do not guarantee price. In other words, stop loss orders are not guaranteed.

The Terms of Business document informs that all retail investors are provided with Negative Balance Protection, which means that the liability of a retail investor in respect of a CFD trading account is limited to payments already made into the account.

Fees

In addition to all the usual fees, such as spreads and rollovers, the company may charge monthly fees (such as data fees) to any account that has no trading activity for at least 30 calendar days. The amount of the fee is not mentioned.

Deposits and Withdrawals

Deposits can be made by bank transfer, credit/debit cards or by e-wallets such as Neteller, Skrill, Sofort and UnionPay. The minimum deposit is USD100 and there are no fees on deposits. Money sent by bank transfer arrives within 1-5 business days, while any other method is immediate.

Withdrawals can be made in the same ways as deposits – bank transfer, credit/debit cards and electronic wallets. The company charges a fee of USD25 if no trades are made and the full deposit is requested for withdrawal. Withdrawals are processed in one business day and the transaction time is within 1-5 business days.

Trading Platforms

You can trade via one of the most popular trading terminals worldwide – MetaTrader 4 (MT4). It offers a complete solution for your trade, while helping in using technical and fundamental analysis. This is a highly personalized terminal showing detailed information about financial assets and transactions. There are many custom technical indicators and charts that will help you determine the right strategy for you. The platform is also available as a web-based version that works on any browser without the need to install software.

Assets

Currency pairs – 60 popular major, minor, and exotic currency pairs can be traded. Spreads depend on the account type and the average value for the EUR/USD pair is 2 pips for the Standard account and 0.6 pips for the Premium account.

Indices – You can trade 9 of the major indices globally, such as DAX30 and UK100. The average spread for the DAX30 is 3 points.

Commodities – 8 of the most traded commodities are available such as Gold, Silver, Oil and Brent. The average spread for the Gold is USD0.33.

Cryptocurrencies – 4 cryptocurrencies are available for trading: Bitcoin, Ethereum, Litecoin and Ripple. The average spread for Bitcoin is USD32. The required margin is 100% or 1:1 leverage.

Education

There is an educational section on the web page called Trading Tools and Education. You can watch a few recorded webinars and subscribe to an upcoming event (if there is any). A third-party economic calendar can be viewed here as well.

Summary

TeraFX is an FCA-regulated brokerage firm, which uses the STP Model to execute client’s orders, so there is no major conflict of interest. You can trade currency pairs, commodities, indices, and cryptocurrencies through the MT4 terminal, available as a desktop version and as a web-based version. You can deposit by bank wire, debit/credit cards, and e-wallets. You can start trading by deposit as low as USD100. Spreads are variable but the one for the EUR/USD pair has a relatively high average value of 2 pips (for the standard account). The ECN account offers raw spreads at the expense of the commissions.